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Budget proposal: 0.5% raise, 1.2% increase in retirement contributions

Feb. 13, 2012 - 06:00AM   |  
By STEPHEN LOSEY   |   Comments
Staff assistant Kathleen Llewellyn of the Senate Budget Committee holds up a copy of the president's FY2013 budget request Feb. 13 on Capitol Hil.
Staff assistant Kathleen Llewellyn of the Senate Budget Committee holds up a copy of the president's FY2013 budget request Feb. 13 on Capitol Hil. (Alex Wong / Getty Images)

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President Obama today reiterated his call for federal employees to contribute more to their pensions.

The White House's proposed budget for fiscal 2013 calls for increasing employees' retirement contributions by 0.4 percentage points per year for three years, or 1.2 percent, the National Federation of Federal Employees said. This would increase Federal Employees Retirement System employees' contributions from 0.8 percent to 2 percent, and Civil Service Retirement System contributions from 7.0 percent to 8.2 percent.

Future federal employees would also lose a supplemental payment that current FERS retirees not yet eligible for Social Security receive, NFFE said.

Obama's 2013 budget also proposes a 0.5 percent pay raise, as expected. If approved, the raise would be the smallest pay raise in the General Schedule's history, but it would break the current pay-scale freeze federal employees have been under for the past two years.

NFFE National President Bill Dougan denounced the retirement cuts in a statement.

"Though we applaud the president for proposing an end to the two-year federal pay freeze, we strongly oppose all budget provisions impacting federal retirement security," Dougan said. "After two years of frozen pay resulting in $60 billion in savings, it is unfair to ask federal workers to pony up yet again for deficit reduction."

The proposals mirror those Obama proposed last September in a plan submitted to the so-called deficit reduction supercommittee.

But they would be less painful than Republican proposals cutting federal retirements. HR 3813, the Securing Annuities for Federal Employees Act, would require current federal employees to pay 1.5 percentage points more for their pensions, and for newly hired feds to contribute 4 percent toward their pensions. HR 3813, sponsored by Rep. Dennis Ross, R-Fla., would also calculate pensions for newly hired feds at a much lower rate, and base their pensions on their highest five annual salaries, instead of the current high-three.

Ross' bill would also eliminate the FERS supplement for all employees who retire after this year, not just new employees. It has been attached to HR 7, the House's surface transportation bill, which could come up for a vote this week.

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